For those who have arrived here via search engine, this is (bonus) Part Four of a response to a reader question, “How do I go about starting a Federal Career”? I recommend you start with Part One of the response to catch up.
So, you wan to be a Fed, huh? Let’s review the traditional advantages to being a Fed:
- Steady Paycheck that arrives like clockwork every two weeks.
- Predictable pay progression (within a defined career pay band).
- Across-the-board pay scale raises, adjusted for inflation every year.
- Defined-Benefit Pension, paid with only 0.8 percentage of your salary, provided by the same outfit that has the power to print more money if they run out.
- 401k-type plan, dollar-for-dollar match on the first 5 percent of your salary.
- Under FEHB, choose from many of the best health plans available in the country for under $400/month for family coverage.
- Commuting costs can be covered or partially offset in many cities, up to $245 Transportation Incentive Program (TIP) per month in tax-free benefit.
- Layoffs very uncommon, Top-line revenues for your agency are predictable and likely to rise every year.
- All Federal Holidays, plus up to 8 hours in paid vacation earned every two weeks.
- Sick Leave is provided as a separate benefit (not lumped in with vacation in a “Paid Time Off” bank) of 4 hours accrued per pay period, never lost once earned.
Traditional Disadvantages of being a Fed:
- There may be limited promotion opportunities within your agency.
- You will never have an Employee Stock Purchase Plan or have the possibility of striking it rich on company stock.
Flash forward to today’s Federal Agencies. Let’s review some recent headlines:
Sequestration is very likely to continue in to FY14. Agencies are preparing two budgets, one for at a level of spending the White House has requested, and the other scenario- the one where the Tooth Fairy doesn’t magically fix the nation’s budget woes (aka Sequestration).
In spite of the likelihood of Sequestration, Defense Agency heads- Who fully recognize that they are burdened by the costs of excess support infrastructure- Have repeatedly requested and have been officially denied another round of Base Closings (BRAC).
Now it’s time to apply theory-to-practice. Review the traditional advantages of Federal Employment and place them in the context of today’s budgetary challenges.
Steady Paycheck that arrives like clockwork every two weeks.
Not so fast. Under sequestration, you are highly likely to lose anywhere from 0 to 12 paydays this fiscal year. You lose zero days if you have the luxury of working at a facility (Naval Shipyard) heavily defended by the Senate delegations from Maine or Hawaii- The rest of us Feds can pretty much suck it.
Predictable pay progression (within a defined career pay band)
Not so fast. Hiring freezes are standard policy in most agencies right now, with new hires or requisitions the exception to the rule.
Across-the-board pay scale raises, adjusted for inflation every year.
Uh, not since 2010.
Defined-Benefit Pension, paid with only 0.8 percentage of your salary, provided by the same outfit that has the power to print more money if they run out.
Once again, this benefit is under attack. If you were hired on or after January 1st 2013, your pension is “Fers-RAE (Revised Annuity Employee)”, aka “FERS-Lite”, aka “Fake FERS” (My term- Hope it goes Viral). You’re contributing much more of your salary (3.1%) to the FERS Annuity – Almost 3 times the contribution of those in the “Real” FERS Annuity system.
Even if you are covered under “Real” FERS, your salary is still under attack. Each and every budget proposal being kicked about right now is attempting to ratchet upward the employee contribution to FERS Annuity.
Under FEHB, choose from many of the best health plans available in the country for under $400/month for family coverage.
FEHB remains intact, but there are two dangers here:
- Many of the FEHB plans could provide a benefit that is too expensive under ObamaCare, and be subject to the ‘Cadillac Tax’ in 2018. Don’t expect any of these plans to hang around- They will be altered or reduced in benefit because it is highly unlikely that OPM is going to pay a ‘health care luxury tax’ penalty in times of constrained budgets.
- Also under ObamaCare, FEHB may not be that great of a deal. If you’re a family making less than $70k per year, you might get coverage just as decent at the same cost by going on to an ObamaCare individual health exchange plan (Don’t ask me who is going to pay for all of this).
Layoffs very uncommon, Top-line revenues for your agency are predictable and likely to rise every year.
Just about every Federal Agency is considering RIFs right now, and recent Think Tank studies indicate likely DoD Civilian RIFs numbering between 80,000 and 260,000 pink slips over the next five years.
Revenues per agency and command right now are anything BUT predictable. Most DoD commands have budget uncertainty that rivals that of a cyclical business. I would even compare it to my experience in the semiconductor/telecommunications industry during the burst of the Internet Bubble. If you’re a private sector employee right now, you’re quite unsympathetic to this ‘plight’ and could even be excused for laughing out loud. However, it’s no laughing matter for Federal Agency Heads who are ill-equipped to wrestle with issues like:
- Unpredictable Top-Line Revenues. Agency Heads are not as experienced in dealing with ‘Revenues not matching the Sales Forecast’ for the year, and
- Reducing costs via Trimming Headcount or performing a ‘Forced Shutdown’ in the private sector does not require congressional approval.
- Some ‘Colors of Money’ spent by the government are only committed year-to-year (Operations), while some commitments are irrevocable and spread out over many years (MILCON, Procurement Dollars).
Make sure you weigh these caveats in to any career shifts you are considering regarding Federal Employment.
- If you’re Active Duty, count your blessings that MILPERS (your paycheck) is fenced off from Sequestration.
- If you’re considering leaving a Private Sector gig for Federal Employment, evaluate whether or not your company is on financial ground that is more solid than that of our Federal Government.
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